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From the bottom of the first page in the report: Overall Gain – 1964-2019 .................................................... Berkshire: 2,744,062% S&P: 19,784% Huh? 2 million percent vs. 19k ?
Tough game managing that much money.
After having seen so much nonsense accounting in the books of so many startups (especially recently, it feels like a growing trend) it's refreshing to see GAAP. The difference in standards between the startup universe and the 'real world' is actually scary. There have been far too many instances of people getting taken for a ride based on EBITDA when the company's financials were far from healthy. Am I alone in think…
“Shareholders having at least $20 million in value of A or B shares and an inclination to sell shares to Berkshire may wish to have their broker contact Berkshire’s Mark Millard at 402-346-1400. We request that you phone Mark between 8:00-8:30 a.m. or 3:00-3:30 p.m. Central Time, calling only if you are ready to sell.” $BRK.B holder myself — What is this? Is this essentially if you have a big enough position you can…
I'm guessing they have a number of shares they want to buyback and it's simply not worth their time trying to wrangle them from investors with less than $20 million worth
Earlier quoted context omitted.
Selling 20 millions would cost you a little fortune in broker fees. In turn BRK are buying back and paying brokerage. It makes sense to sell directly. And I don't think you get a better price than the market even selling 20M, you just sell at market price. This saves money to YOU, the shareholder, so you should be happy with it.
Broker fees? I assume you mean the individuals entity that manages their portfolio charges a fee. Obviously when you have that much wealth you aren’t using E*Trade or Schwab $0 commissions trades.
“Shareholders having at least $20 million in value of A or B shares and an inclination to sell shares to Berkshire may wish to have their broker contact Berkshire’s Mark Millard at 402-346-1400. We request that you phone Mark between 8:00-8:30 a.m. or 3:00-3:30 p.m. Central Time, calling only if you are ready to sell.” $BRK.B holder myself — What is this? Is this essentially if you have a big enough position you can…
From the bottom of the first page in the report: Overall Gain – 1964-2019 .................................................... Berkshire: 2,744,062% S&P: 19,784% Huh? 2 million percent vs. 19k ?
Although interestingly heir performance in the last 10 years has roughly matched/slightly lagged the S&P index. Tough game managing that much money.
Perhaps matching S&P without investing in some of the biggest gains is quite a notable outcome?
After reading all the positive comments about BRK in this thread I came across this article: https://www.nasdaq.com/articles/hypocrisy-berkshire-hathaway... For somebody with little knowledge of financial services (i.e., me), how would you recommend that I interpret this?
Last Week Tonight with John Oliver had episode about those practices including Clayton Homes. https://www.theguardian.com/culture/2019/apr/08/john-oliver-... The point of the story is that 1) Mobile homes are horrible investments. They go rapidly down in value. “cars go down in value. Mobile homes go down in value. It’s a car you sleep in.” 2) Private equity groups such as the Carlyle Group, TPG and Blackstone now ow…
You will see people who do some renovations and kid themselves that this is an "investment" in their home - in practice the increase in market value of the home will typically be negligible, sometimes negative and only in some very unusual cases would it meet or exceed their costs in doing the work. This doesn't make renovating your house a bad idea, but you should have your eyes open that it's only an "investment" the way a nice meal or holiday trip is an "investment".
The reason Real Property (usually) goes up in value is that it's in some sense scarce. If I need fifty square metres of Manhattan Island, no amount of Ohio, whether fifty square metres or fifty square miles is a valid substitute.
The hmme can seem like it adds value because an equivalent amount of land nearby with no house on it is often worth much less - except if that equivalent amount of land comes with legal authority to put a house on it you'll find suddenly it is worth almost as much as the land with an actual house on it. That permission (where required) is very valuable, the timber and paint and so on not so much.
Unspoken in Buffets letter is the problem that these unrealized gains cannot be realized in a short period of time. The size of Berkshire Hathaway's holdings is such that, if they were quickly sold, they would fetch a lower price - they would saturate the available buy orders and move the reported valuation (average sale price) down.
After having seen so much nonsense accounting in the books of so many startups (especially recently, it feels like a growing trend) it's refreshing to see GAAP. The difference in standards between the startup universe and the 'real world' is actually scary. There have been far too many instances of people getting taken for a ride based on EBITDA when the company's financials were far from healthy. Am I alone in think…
The 'real world' is scary too. Also, you can't really compare the financial statements of startups with established blue chip companies. Investors do not expect nor are they looking for the same things from them. Just like people who buy into VC funds have different goals and expectations from those who invest in an index fund. VC funds, index funds, startups, blue chips all have different "standards".
> Am I alone in thinking this?
No, I'm sure a lot of people agree with you. It's just that Buffet and Munger aren't one of them.
Whatever the accounting standards, I believe it was buffet who said you won't know who has been swimming naked until the tide pulls out ( we won't know how healthy the balance sheets are until we have a recession ). Enron, Washington Mutual, etc all had "healthy balance sheets" until they didn't. And all of them even had the seal of approval from the 3 or 4 major auditing firms too.